Gold Hits Highs Not Seen Since 2013. Dovish statements from global central banks recently aren’t the only reason for gold’s rise past $1,400 an ounce this week to levels it hasn’t seen in nearly six years.
“Gold is a global market and U.S. monetary policy, while important, is not the only driver of performance,” Juan Carlos Artigas, director of investment research at the World Gold Council, told MarketWatch on Friday.
On the macroeconomic level, there’s “the combination of increase geopolitical tensions and a more accommodative monetary policy stance signaled by central banks, including the [European Central Bank] and the [U.S. Federal Reserve], which have pushed global interest rates lower,” he said.
U.S.-China tensions over trade policy persist as traders await an expected meeting and progress toward a resolution on the trade dispute, between U.S. President Donald Trump and Chinese President Xi Jinping at the Group of 20 leaders summit on June 28-29.
Meanwhile, Trump said Friday that he was prepared to conduct airstrikes against Iranian targets in retaliation for Iran’s move to shoot down a U.S. drone, but called off the strikes.
“Further tensions in the Middle East could bid gold prices higher through haven demand in the short term,” said Maxwell Gold, director of investment strategy at Aberdeen Standard Investments, though “key factors in control of gold right now are rates and recession fears.”
Potential headwinds for gold would include any “hawkish signaling by the Fed or an immediate resolution to the trade war between the U.S. and China,” which would likely contribute to strength in the dollar, Gold said.
On Friday, gold futures for August delivery US:GCQ19, the most-active contract, settled at $1,400.10 an ounce on Comex, after touching an intraday high of $1,415.40. Prices finished at their highest level since September 2013, according to FactSet data.